The executor of an estate is a multifaceted responsibility, which can be a rewarding, yet challenging role with both advantages and drawbacks. 

An executor is a position bestowed upon an individual(s), often a family member(s) or close friend(s), that would act upon the deceased’s wishes with trustworthiness, understanding and dignity.  However, what had typically once been considered an honour, being named as the executor of the estate (also known as an estate representative), in recent times has surely become a significant responsibility with unique challenges. 

Below are a few things to consider before naming or accepting the role as executor.

 

THE GOOD

• Control.  As a loved one or close family friend, the executor is able to have full accounting of the process, ensuring that their actions meet the deceased’s wishes.
• Compensation.  As the executor, they are compensated for their duty.  Generally speaking, an estate executor in the province of Ontario can be paid up to 5.0% of the gross value of the estate.  This compensation is a taxable event on the executor’s tax return.^[1]

 

THE BAD

• Geography.  There are often cases where the executor lives at a considerable distance from where the deceased was residing.  This can inherently create problems with regard to timely decision-making and communication, especially true for adult children which is further complicated if they reside outside of Canada.^[2]
• Family politics.  There are often times when executors have to sort and distribute the contents of a deceased’s home/other physical assets.  These items may need to be appraised before reaching the heirs and in some cases, the heirs may deem to have been short-changed on their value.  Disagreements may occur as to who received which items, and often the executor bears the brunt of these arguments.

 

THE UGLY

• Grieving.  The reality is, in the moments and days after a loved one or friend passes, an executor is not only grieving with the loss but is also tasked with settling the estate, which, depending on the estate, can be a major undertaking and be very time consuming. 
• Liability.  The province of Ontario has up to four years after the probate certificate is issued to assess or reassess the estate’s value. If an audit determines that the estate’s value was underestimated, the estate is liable for the additional tax.  Furthermore, the Ontario government has broad auditing powers which can impose substantial penalties on executors if an estate’s value has been misreported (especially as it relates to probate tax).^[3]

 

Unfortunately, dealing with one or more of the issues highlighted above has increasingly become a distinct possibility as Canadian seniors significantly outnumber their next generation—a phenomenon that has been dubbed Canada’s ‘Silver Tsunami’.  Having this conversation with yourself and/or your future executor is an important step.  In our experience, clients have benefited from a formal estate planning consultation with our in-house Trust and Estate Specialist in order to optimize, and potentially, simplify their estate.